The reason why not all differences can be celebrated


Imagine this: You fall sick and visit the doctor who diagnoses a mild condition. A month later however, you still feel unwell and consult another doctor. This time, the prognosis is grim. You only have six months to live.

How is it possible that professionally trained doctors can give completely different diagnoses? A random error called noise explains this.

In their book, “Noise: A Flaw in Human Judgment”, Nobel-prize winning behavioral scientist Daniel Kahneman, with co-authors Cassy Sunstein and Oliver Sibony describe noise as unwanted variability [1] . With high levels of noise, something as random as the weather or last-read news could affect professional judgment which should have been consistent throughout.

Beyond the medical field, noise is highly prevalent in other professional services industry.

Noise in the financial advisory world

Perplexing variability can be detected in financial advice given by different financial advisers for the same customer profile and accessible product shelf.

Without attempts to quell noise in the industry, financial advisors are not interchangeable. This means financial advisory firms are unable to scale their business and customers cannot rely on a single opinion.

However, it is not apparent to customers that they should seek different opinions. Self-verification of financial advice, up till recently, is difficult. It is a process which complexity should not be underestimated. Financial advice does not merely comprise identifying financial needs and gaps. Sound financial advice takes comprehensive consideration of all financial objectives and profile of the customer synchronously. This means customers should receive solutions that are optimized, enabling them to best fulfil their prioritized financial objectives in view of their profile, such as risk tolerance, constrained budget, and time horizon.

Hence even if customers know they ought to seek different opinions due to the inherent noise in financial advisory, they will still find it difficult to assess all of them and decide on one.

…to make it worse, we are wired to be ‘noisy’

The truth of the matter is that noise isn’t just within us, it is an unchangeable part of us as humans.

Since primitive times, creative problem-solving skills have evolutionary benefits as humans needed to explore ways to survive, such as fire-making for warmth [2] . This creativity inevitably gives rise to variability in judgement and as long as there are no immediate negative associations, the variability survives through time. In other words, noise is an evolutionary by-product of what makes us human.

If humans are wired to be ‘noisy’, how can customers then get consistent and high-quality financial advice?

We can reduce noise

Noise can be eliminated through mathematical algorithms because they remove nuances and variability. In 360F, we run algo-driven optimization and robust stress-testing to minimize noise and therefore room for subjective judgement.

Built on the backbone of Nobel Prize-winning research in behavioural economics, namely Prospect Theory, 360-ProVestment® processes all of the customer’s insurance and investment priorities and profile including loss aversion and constraints within a mathematical function that ultimately quantifies the customer’s self-defined financial satisfaction. The solutioning optimizer then stress-tests possibilities before generating solutioning options based on the financial advisor’s accessible product universe, i.e., it customizes virtual bundles of insurance and/or investment products that yield the highest financial satisfaction for the customer.

Remove noise but not the human touch

The goal to eradicate noise does not supplant our innate need for human connection. Human empathy is key to certain aspects of financial planning which are emotionally sensitive for areas such as legacy planning.

Hence, we foresee the rise of digital advice. Through effective collaboration with advisors and optimization technologies such as 360-ProVestment®, consumers can receive quality and noise-free financial advice.


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[1] Kahneman, D., Sibony, O., & Sunstein, C. (2021). Noise: A flaw in human judgment. Little, Brown & Company

[2]  Carruthers, P. (2002). Human creativity: its cognitive basis, its volution, and its connections with childhood pretense. British journal for the philosophy of science. 53(2): 225-249